Business registration
In fact, almost everyone who has now rushed to export cars from Russia simply works as individuals. However, if you are not going to transport 1-2 cars at a time, but to expand your business on a larger scale, it makes sense to open a car sales site in Germany. To do this, you will have to legalize your business.
How much will it cost to register a legal entity in Europe? Here is the approximate cost of opening a business in Germany:
- Firstly, you will need to pay for notary services - this is approximately 130 euros, and the final figure depends on the amount of the authorized capital;
- Next, you need to pay a fee for registration in the trade register - prepare 150 euros;
- After this, you will need to register with two more departments - the so-called Gewerbeamt (something like an institute of entrepreneurship) and the Chamber of Commerce and Industry.
The total amount of registration costs is affected by the number of founders, the organizational and legal form and the size of the authorized capital. On average, to open a GmbH (analogous to our LLC) you will need about 1,200 euros.
By the way, there are now many offers on the services market for entrepreneurs from other countries, including Russia. For an extra thousand euros, they will submit all the necessary documents to the relevant authorities for you, and they will do it quickly - they promise to do it within 1 day. Is this real? From the experience of entrepreneurs, it’s real. However, it is necessary to understand that a legal entity registered during the day will still have a number of restrictions - you will be able to rent the same site for cars or hire staff, but you will not be able to conduct financial calculations. This will become possible only after receiving an extract from the trade register, a tax number (analogous to our TIN) and opening a current account.
Whether the game is worth the candle is up to you to decide. It all depends on the planned volumes of machine deliveries. If you bring in dozens of vehicles, you cannot do without opening a representative office with a platform, but if we are talking about one-time hauls, it is of course easier to work simply as a “physicist”.
Car purchases
In order for the profit to be as high as possible, everything is quite obvious - it is necessary to find cars in Russia at the best prices and sell them to foreign buyers as expensively as possible. The question is: how to do this? Typically, at the “bottom” of the market, vehicles that have been in serious accidents or have technical faults that require additional investments are sold. These two categories of cars are not very profitable to sell.
However, there is a certain market niche that is a real sweet spot for enterprising exporters. These are cars that have been repeatedly involved in insurance claims here in Russia. How does this “gray” market work?
It is no secret that there is a certain layer of not entirely clean car owners who, having connections in insurance companies and (or) the traffic police, simulate accidents in order to receive insurance payments for damage. In reality, everything looks like this: a damaged donor car is bought, from which, while insurance is being received, a certain part is removed and placed on the main car. After receiving the payment, the original body element is returned to its place.
Let us note that this type of activity is criminally punishable and we are categorically against its conduct (for example, even the famous blogger Davidich went to jail on charges of fraud with insurance companies). However, the purchase of such cars from their owners is completely within the legal framework - by purchasing and reselling them you are not violating anything.
After “working out” several insurance cases, the car is put up for sale by the previous owner at a fairly low price, which is generally logical. In any database of insurance companies or online services for checking cars (for example, the same “Avtotek”) the car looks as if there is no living space on it. Although in fact there was not a single real accident with the car.
Will the average car enthusiast buy such a car in Russia? If they are buying it for themselves and for a long time, it is unlikely that anyone needs a car with a dubious past. But for a foreign buyer the car is quite interesting - he evaluates it without reference to the “insurance” past. The body is in order, technically everything is excellent, the price tag is interesting. Therefore, it is these types of cars that are most profitable to buy for further export to European countries.
Emigration on wheels: how to move to another country for permanent residence and take your car with you?
From personal German experience
It is interesting that not all emigrants fall under the axiom “they usually sell and buy another one on the spot.”
For example, Mikhail from Samara, who moved to the German city of Ulm about 10 years ago, told us that he didn’t even think about creating problems for himself and simply sold his “six”. “Of course, I sold the car before moving, because transporting a vehicle is too expensive and tedious. In general, I don’t know anyone who would bother so much. And in general, here it’s enough to just buy a used, but decent car. In addition, not all Russian cars can drive here; they simply do not meet environmental standards,” Mikhail shares his experience.
However, the extensive discussion that took place on the website tupa-germania.ru under information about how to transport a car suggests that the issue exists and is not isolated. For example, Natasha Xrisanfova literally said in January of this year that she and her husband were moving to Germany for a long time:
“My husband studied here and now works, that is, he has a blue card and an employment contract. Accordingly, I am moving as a wife - restoring the family. The car in Russia is registered in my name, so it turns out that our car is subject to such a free transfer.”
However, there is a small snag with what kind of car you are going to transport and whether the German side will accept it on technical rather than legal issues. Site user Dmitry shared a similar problem in mid-December last year:
“I have a Russian-assembled Opel. The information is extremely contradictory. Some say that you can drive Russian license plates for a year, others say 6 months a year. Someone writes that MOT cannot be passed with Euro-4 and needs Euro-5, another says that it passed with Euro-4, but it is not clear how many years ago. I read somewhere that there is an exception to the rule of mandatory registration of a car during the year, that for students and workers under temporary residence permit, it is not necessary to register a car for the entire period of temporary residence permit.” That is, there is a big risk of bringing a car and running into a bureaucratic wall.
A little later, in the same comments, Dmitry said that he had sold his Russian Opel. Because even with the growth of the euro, transporting a car to Germany turned out to be unprofitable - about 2,000 euros, and it’s also time-consuming.
As a result, we can subjectively assume that those who decide to sell their cars first are mainly those who move to Germany immediately for permanent residence, and not first for work and study. The latter still “bother” and arrange everything as expected.
Staff
To run a business, you will need several people with experience in the auto business who are well versed in the current prices for cars and the nuances of purchasing them. They will engage in the initial selection of transport for its purchase.
These are 2-3 car selection experts whose tasks include the following functionality:
- Calling advertisements for sale on popular boards such as “Avito” and “Avto.ru”;
- Departure to inspect the car (visual check for an accident) and diagnose its technical condition;
- Checking databases for accidents and insurance payments;
- Drawing up purchase and sale agreements with car owners;
- Driving purchased vehicles to the final destination (Russian border or destination country).
Problems when deregistering a car
What difficulties may arise when deregistering a car?
First, the vehicle may be subject to registration restrictions . In this case, the car cannot be deregistered until the restrictions are lifted. Let’s say right away that this point can become an insurmountable obstacle, however, as a rule, restrictions must be lifted within 1-2 weeks. Read more about this in our article Removing restrictions on registration actions.
To avoid such situations, we recommend that you check the vehicle for restrictions BEFORE purchasing.
Another obstacle may be the fact that the car has already been deregistered by the previous owner. There may be several reasons for this: for example, the owner sold the car to a certain citizen Ivanov, a sales contract was drawn up, the car with documents was transferred to the buyer, the money for the car was paid. But the buyer, citizen Ivanov, turned out to be dishonest and did not register the car. At the same time, the seller still receives fines and taxes on a car that was sold long ago. Then the seller contacts the traffic police to deregister the car in connection with the sale. And, in fact, the car was deregistered. And then our citizen Ivanov decides to sell his unregistered car to a citizen of a foreign country. The transaction is completed, but problems may arise when deregistering with the traffic police, since the car cannot be deregistered twice.
Finally, when deregistering, difficulties may await the buyer at the vehicle inspection site at the traffic police. It often happens that the previous owner replaced the car's engine, but did not contact the traffic police to register it. In this case, the car is recognized as non-compliant with the documents. And the buyer may be refused. It is also possible that the vehicle’s VIN number or body or frame number is partially or completely lost. In this case, the car is sent for examination (this can take from 1 month to six months), which also prevents the car from being deregistered.
These are, perhaps, the main difficulties that may await a foreign citizen when deregistering a car for export outside the Russian Federation.
Advertising and Marketing
To supply cars from Russia for export in 2021, you can use both online services and find offline partners who will take over the process of selling the car in Europe.
If we talk about message boards, the German site Mobile.de is very popular in Europe, and the site of the largest Minsk car market “Avtomalinovka” - Av.by - is very popular among Belarusian intermediaries. By placing your car there, you indicate that the car is located in Russia and agree with the potential buyer on the process of showing and purchasing the car. Some are ready to come for inspection directly to the city where you are, while others will find it more convenient to look at transport near the border. In this case, it is necessary to agree on an advance payment in advance to compensate for the costs of delivery within the Russian Federation.
The second possible option is that you find intermediaries in Belarus (now this is a kind of “gateway to Europe”) who take on the entire process of further selling the car to buyers from the Old World. Each of the partners earns their percentage by doing part of the work of selecting, driving and selling the car.
Let's look at the benefits using a specific example
To understand how profits are generated from exported cars, we suggest looking at a specific example. Let's take the five-year-old BMW X6 crossover (2015) of the second generation. On the Russian market, good copies without accidents or technical problems are valued at 2,500,000 rubles and more. However, this is the market price; of course, when the car is trade-in or urgently sold, its price will be lower.
The price level for each specific car depending on the year, version, engine and other parameters can be found out using the valuation service from Auto.ru. It is quite simple and does not require any special technical skills - the user simply enters data on the car.
So, the German crossover we are considering with a three-liter engine, according to the service, when sold in a large city with a million population in the south of Russia will cost from 2.2 million to 2.5 rubles in trade-in, or from 2.6 to 2.9 million rubles retail. A good car from “insurers” can be found cheaper - from two to two million rubles.
It won’t be so easy to make money on the resale of such an “X” in Russia (Avtotek easily reveals a turbulent past with work in insurance), but it is very interesting to foreign buyers - the car itself is quite good.
According to prices in euros as of the end of March 2021 (we specifically clarify - because the exchange rate is constantly jumping), two million rubles is about 23,000 euros. For that kind of money in Germany you can only buy a first-generation car with a restyled body. Analogues of the same year of manufacture as the X-Six we are considering cost from 35 to 40 thousand euros - you must agree, there is a noticeable price range, isn’t it?
However, do not rush to rub your hands in anticipation of easy profits - after all, the car still needs to be transported to Europe and cleared through customs there. How does this process happen?
Car transportation to Europe and customs clearance
What actions need to be taken up to the sales stage? First, the car needs to be deregistered in Russia. To do this, we go to the MREO at the place of registration, pay the state fee and receive metal transit numbers.
After this, you can already transport the car to Europe. What documents are needed for this? You will need a foreign passport with a Schengen visa, a driver’s license, PTS, transit insurance from compulsory motor third party liability insurance, insurance of the European Union type (“Green Card”), a customs declaration (you can get it at the customs office).
When entering the territory of a country that is a member of the European Union (in our case, let’s consider the example of Germany), you must fill out a special customs form No. 0350 and pay fees, after which the customs authorities issue a special permit, which makes it possible to register the car in any city. Next, you present the technical passport of the car and you get a wedge heel (TÜV or DEKRA).
Once a German buyer has been found (we covered the process of finding clients in more detail in the section on advertising and sales) and is ready to purchase a vehicle, it will be necessary to undergo a technical inspection. The Germans' requirements for the technical condition of a car are quite strict, but quite feasible for a fresh five-year-old car. After checking the technical suitability of the car for operation, the future owner and seller from Russia go through the procedure of registering the car and payment is made.
Actually, this completes the entire transaction process, and the entrepreneur can safely return to Russia for the next car.
Violation of temporary import deadlines
Is it possible to extend the period of import and export of transport? Violation of the terms of temporary import and export of a car sometimes happens through no fault of the owner. For example, this may be the case if, at the time when it is necessary to cross the border, the car breaks down, has an accident, or simply burns out. As a rule, car owners, due to ignorance of the laws, simply go with the flow in the hope that the situation will resolve itself. But you shouldn't do this.
It is better to write a statement addressed to the head of the customs office where you filled out the passenger customs declaration, and attach documents confirming the fact that the vehicle faulty or burnt out.
According to the law, you can contact the customs authority within 15 days after the temporary import of a car or its export has expired. However, there is no need to delay. It is better to settle all formalities in advance.
Attention: watch a video on the topic of customs disputes, and also subscribe to our YouTube channel so as not to miss useful information and the opportunity to consult a lawyer for free:
Financial indicators
Attachments.
Now we suggest looking at a specific example of how much you need to invest in a business in order to make money from it. Let’s immediately make a reservation that you can count on any significant profit only by exporting relatively fresh cars, preferably premium brands.
The minimum investment threshold is about 1,000,000 rubles, for this money you can buy a fresh BMW 3 Series, Mercedes C-Class or Audi A4 that is in demand on the EU market. Another about 2000 euros must be kept in reserve for travel (fuel, accommodation, visa, etc.). Let's add a small investment for paid promotion on message boards (about 100 euros) - and we get the final result:
To start a business exporting cars from Russia in the spring of 2021, you will need about 1,200,000 rubles.
Marginality.
Even after the costs of delivery and customs clearance of cars in Europe, the entrepreneur’s profit can easily reach about 20-25 percent - this is the difference between buying a good car at a good price in Russia and selling it at an average price in Europe.
20-25%. Is this too much? Let's compare the margins on car sales within Russia. As of 2021, official dealers earn about 10 percent on the sale of NEW cars. Yes, sales volumes there are incomparably greater, but they also incur costs for maintaining car dealerships, wages for employees, and so on...
The average earnings of a private “outbidder” in Russia now also varies from 7 to 12 percent of the price, if you do not take into account individual cases when you are simply lucky to buy a car below the market and sell it successfully. Against this background, a profitability of 20 percent on car exports to European countries looks like pretty good numbers.
Revenue.
The average income of an entrepreneur, even when selling one car per month, will be about 200,000 rubles. If the car was found on its own, the entrepreneur will not incur any more costs if, through partners (for example, trade-in employees at dealers or private selectors), about 10 percent more will be spent on paying for their services.
Net profit and payback
. In any case, the amount of net income from exporting a “million dollar” car will be about 180,000 rubles. Accordingly, investments in business are recouped within 6-7 months.
Rules for deregistration of a vehicle before export to another country, which a motorist needs to know
When the registration of a car is canceled before being exported outside the Russian Federation, the vehicle passport is disposed of at the traffic police department. If there is no document, the PTS is put on the wanted list.
The previous owner of the car must remove the license plates and hand them over to the State Traffic Inspectorate. License plates transferred to the reserve are disposed of or assigned to other vehicles. If desired, you can keep the numbers for a certain period of time for further use on another car.
In accordance with current legislation, termination of registration of a vehicle for subsequent export to another country is carried out only if there is a title document. This may be a purchase and sale agreement, a gift agreement, or an equivalent confirmation of ownership provided for by the laws of the Russian Federation.
To transport a car to another country, it is assigned “transit” numbers. The owner of the car is required to pay a state fee for issuing such license plates.
The registration certificate is issued in the name of the new owner. The “address” column indicates the state where the new owner of the vehicle lives.
About risks
However, one should remember about a number of threats to this line of activity, and the main one is now heard even by those who are far from the auto business. We're talking about coronavirus.
How justified is the risk of supplying cars abroad in a pandemic, which is especially widespread in the European Union, is up to you to decide. Yes, it’s profitable - but what is the price of your health and won’t you lose much more than just money?
Let's not forget that the risk of infection in the European region at the time of writing is much higher. Moreover, literally in recent days it has become known about restrictions on flights from other countries, which could significantly complicate the return of entrepreneurs from their “earnings.”
Time will tell whether exporting cars from Russia will continue to remain a profitable business niche. We, in turn, will try to always provide up-to-date information for our readers about all new ideas and trends in business.
Denis Maleev
, director of a transport company, auto journalist, expert of the openbusiness.ru portal in the field of auto business Contact the author (c) www.openbusiness.ru - portal of business plans and guides for starting a small business
03/31/2020
All materials by tag: auto export, car hauling
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